I had made after-tax contributions to my 401(k). My employer's plan allows in-plan Roth conversions, so I converted the after-tax contributions (and associated gains) from my regular 401(k) account to Roth 401(k).
I received a 1099-R form from the plan provider showing the Gross distribution. The taxable amount (gains) is included in box 2a, and my after-tax contributions are shown in box 5. Box 7 has the distribution code "G".
When I enter this in Turbo Tax Deluxe 2023, i get the prompt "Is this 1099-R reporting a rollover of funds from a 401(k) to a designated Roth 401(k) plan?". I was under the impression that Rollovers are not the same as Conversions. Should I answer "Yes" or "No" to this question? Ultimately, the entire distribution moved to my Roth 401(k) account, and I understand I have to pay taxes on the taxable amount shown in Box 2a.
Appreciate if someone can guide whether I should report this as a Rollover, or whether there is another location in Turbo Tax to designate this as an in-plan Roth conversion.
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Yes, you will select "Yes, this money rolled over to designated Roth 401(k) or 403(b) account" to the "Is this 1099-R reporting a rollover of funds from a 401(k) to a designated Roth 401(k) plan?" question.
Yes, this was a conversion, ignore that this questions is using the word "rollover". You moved the money from the 401(k) to Roth 401 (k), therefore you will answer "Yes" on this screen.
The transaction that you did is called an In-plan Roth Rollover. In the tax code the term "Roth conversion" applies exclusively to the movement of funds from a traditional IRA to a Roth IRA (other than by recharacterization of a contribution). Still, many use the term "conversion" colloquially to describe both types of transactions due to their similarities.
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